Trusted and Experienced AttorneysCall Now

Commercial Real Estate Closings

Commercial real estate transactions occur when a company buys or leases property for business-related purposes. While these transactions are similar to residential real estate deals, they tend to be far more complex, often involving more liens and zoning issues, as well as the potential for highly detailed contracts with many provisions for both parties. The goal of a commercial real estate transaction is to reach a resolution and close the deal in a timely manner. Attorneys who specialize in commercial real estate, work to get the best deal for their client, while also seeking agreement on specific terms so that litigation can be avoided and the deal can close in time. If commercial litigation occurs, attorneys represent their client and seek a swift resolution that, if possible, allows the deal to move forward.

Commercial Real Estate Closings Apply to Situations:

  • Purchasing (and at times leasing) new offices, hotels, warehouses for expansion purposes
  • Purchasing new or recently rezoned land for the purpose of building new assets
  • Acquiring capital and any additional financing necessary for the purchase of new property
  • Creating accounts and trusts to move capital more efficiently for the purpose of buying commercial property
  • Vetting property for any past liens or other legal issues when considering purchase
  • Creating business entities for the purpose of enabling or improving real estate purchases
  • Verifying the conditions of the real estate contract prior to reaching an agreement

The Closing Process

  1. Escrow and Title: The escrow process in residential real estate deals is often a simple, quick affair that is frequently handled by the title company without incident. Because there is usually much more money changing hands in commercial real estate, the escrow process is more detailed and lengthy. A title agent and escrow agent must be chosen (again, this is frequently the same entity for the sake of efficiency). On the escrow side, the agent helps manage the flow of funds, which are transferred first to the agent and then to the seller – a classic third party role. On the title side, the agent checks the history of the property for any legal issues, and helps create the closing documents in accordance with the wishes of both parties. Typically the discussion begins with an agreement on exactly what duties the agents will have and what will “satisfy escrow” and allow the transaction to close.
  2. Legal Entities: In the commercial world, titles are transferred using legal entities (like corporations), which may already exist or may sometimes be created specifically for a key real estate deal. This helps protect individual owners and company employees from issues with liability, and as such is common practice – various tax benefits may be available as well, depending on the state.
  3. Representatives: Each legal entity needs representatives that have the proven authority to act on behalf of the company, typically through a letter of authorization. While this sounds simple enough, signing authority can often be a sticking point for real estate transactions where one or more parties is unprepared.
  4. Due Diligence:  Due diligence refers to the process of examining the real estate contract and all related data, including title insurance policies, survey reports, leases, environment reports, termination notices if necessary, confirmation of down payments, confirmation of proper zoning, information on outstanding liens, and so on. You can see how this can quickly become a time-consuming process, especially if any objections are raised or if important data is missing.
  5. Customization: Every real estate deal is different, and negotiations tend to yield a myriad of different types of contracts, all with unique clauses that adjust the agreement until all parties are satisfied and the deal can close.
  6. Closing: When closing documents are created and agreed upon, the representatives can sign. Once confirmed, funds are released from escrow, payment is completed, the title is switched to the buying party.

How We Can Help

The Gertler Law Group can provide advice on a variety of commercial real estate matters for companies with important questions. When a client is ready to move forward, we also offer assistance with the sale or purchase of commercial property, including making the necessary arrangements for representatives and legal entities, as well as carefully examining all required forms and ensuring that due diligence is fulfilled.

If a deal turns sour, it can lead to commercial litigation between the two parties. Here, we provide experienced mediation services so that a resolution can be quickly reached and the deal can proceed if possible. If litigation moves forward, we can help guide our clients through the process, what to expect, and how to proceed according to their goals.